Arrowhead’s Carrier ‘Lift-Out’ Model Fuels Agency Growth

For 30 years, Arrowhead General Insurance Agency Inc. has grown by being flexible, pivoting quickly to take advantage of a market opportunity. Recently, it has pioneered a business solution it calls a management "lift-out."

Source: Arrowhead | Published on May 20, 2020

Arrowhead's latest innovation example is a lift-out of QBE's small commercial insurance program. QBE transferred the administrative work to Arrowhead, which can efficiently administer operations, marketing, distribution, underwriting, premium accounting and customer service functions.

"We took over management of QBE's book a couple of years ago and quickly saw success, because we already had the support teams and systems in place to give the program the attention it needs across all 50 states," says Arrowhead COO Tom Kussurelis.

QBE maintains its position as the source of capital and paper, explains Walter Grote, president of the two-year-old program, which is called Arrowhead Core Commercial. "QBE selected us because we have access to more independent agents, we can quickly deliver more customers, and we can service those customers throughout the life of the policy."

Small Commercial Challenges

While the small business market continues evolving and represents a growth opportunity, not every insurer is properly aligned to underwrite and service small policy transactions -- those under $100,000 in premium, Grote says. Multinational carrier QBE wanted to invest time and resources in other lines of business and faced a decision about its small commercial book.

QBE employees who had been in small business roles also transitioned to the Arrowhead team. Core Commercial products and services were refreshed, updated and automated, including integration of billing, collections and customer service into Arrowhead's existing operations. In 18 months, eight lines of business were functioning on a brand-new system. Forms were filed in all 50 states, allowing producers to quote, submit new business and service policies on Arrowhead Exchange, a technology platform. Meanwhile, QBE continues to hold the paper and capital. The carrier pays Arrowhead a percentage of the premium and the majority of its expenses disappear.

"The teams from Arrowhead and QBE came together and moved with precision and speed," says Lisa Stahl, Arrowhead's Commercial Division's chief operating officer. "To my knowledge, no one has executed a transfer of this magnitude in this short amount of time."

Stahl adds: "Through technology and automation, Arrowhead is able to deliver better service level standards to carriers like QBE, which improves retention and growth potential. Agents and customers love the service commitment and bring us more business. Plus, QBE can grow its footprint via Arrowhead producers."

Carrier Takeaway

The lesson for carriers struggling to make a line of business work? "Don't give up on a book with growth potential just because it costs too much to service," Grote says.

The Arrowhead/QBE arrangement follows a prior successful lift-out of a Zurich portfolio, Kussurelis notes.

Arrowhead is managing the pandemic well, Kussurelis adds. "Since we're a tech-forward company, the transition to teleworking for our entire team has been straightforward. We've employed remote-working underwriters and program managers all around the country, even before COVID-19."

The program administrator also has been highly active in supporting new insurtech efforts, says Kussurelis. "Arrowhead doesn't invent the technology; we bring the technology and know-how to increase efficiency, reduce expenses and create a runway for profitable growth for our partners.

"We're all about 'spearheading innovation,' reflecting our commitment to often taking a novel approach to property and casualty insurance programs," he adds. "We believe what we did for QBE is truly a differentiator."

About Arrowhead General Insurance Agency Inc.

Headquartered in San Diego, Arrowhead General Insurance Agency Inc., is one of the largest national insurance program managers for commercial and personal products in the U.S., with $1.3 billion written premium in 2019. Arrowhead's relationships with over 20 top-ranked insurance carriers provide stability for its nationwide network of producers. Arrowhead is a subsidiary of Brown & Brown Inc. (NYSE: BRO), ranked by Business Insurance magazine as one of the top 10 largest independent insurance intermediaries in the United States.